Shares of IDEXX Laboratories (IDXX) have been strong performers lately, with the stock up 18.8% over the past month. The stock hit a new 52-week high of $407.86 in the previous session. IDEXX Laboratories has gained 52.3% since the start of the year compared to the 1% move for the Zacks Medical sector and the 17.7% return for the Zacks Medical – Instruments industry.
What’s Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn’t missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 31, 2020, Idexx reported EPS of $1.72 versus consensus estimate of $1.2 while it beat the consensus revenue estimate by 9.93%.
For the current fiscal year, Idexx is expected to post earnings of $5.09 per share on $2.51 billion in revenues. This represents a 4.09% change in EPS on a 4.29% change in revenues. For the next fiscal year, the company is expected to earn $6.26 per share on $2.84 billion in revenues. This represents a year-over-year change of 22.94% and 13.21%, respectively.
Valuation Metrics
Idexx may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Idexx has a Value Score of D. The stock’s Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 78.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 66.2X versus its peer group’s average of 23.2X. Additionally, the stock has a PEG ratio of 5.99. This isn’t enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Idexx currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Idexx fits the bill. Thus, it seems as though Idexx shares could have a bit more room to run in the near term.
How Does Idexx Stack Up to the Competition?
Shares of Idexx have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Fresenius Medical Care AG Co. KGaA (FMS), Cerner (CERN), and ResMed (RMD), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn’t all good news for Idexx. Still, the fundamentals for Idexx are promising, and it still has potential despite being at a 52-week high.
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